E-Commerce Stock Watch: USA/Lycos Deal Dies, But Stocks Rise

Shareholders of both USA Networks (Nasdaq: USAI) and Lycos (Nasdaq: LCOS) benefited on Wednesday, when USA Networks finally gave up its bid to acquire Lycos. Shares of USA Networks climbed 3-9/16 to 39-7/16, while shares of Lycos soared 8-3/4 to 107. Of course, shares of Lycos were at 127 when the deal was originally announced in February.

USA Networks had intended to purchase Lycos and create an e-commerce powerhouse worth more than $20 billion (US$), but Lycos’ major shareholder CMGI (Nasdaq: CMGI) balked at the deal.

Wall Street may be bidding up the stock of USA Networks and Lycos because now that it’s certain that this deal is over, there is speculation about what the companies might do next in terms of partnerships and mergers. Speculation, of course, often leads to spikes in stock prices.

USA Networks may now be looking for another company to buy, and don’t be surprised if you start hearing talk about Lycos merging with another major media company. It doesn’t seem wise for such a major Internet portal player to stay independent, considering that Yahoo! has bought GeoCities and Broadcast.com, the Go Network is benefiting from Disney’s multimedia empire, and Snap.com is becoming the anchor site for NBC Internet.

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